The inside of the magistrate's court on central London's Horseferry Road has a definite feeling of diversity.

The presiding judge, a white woman, is flanked by two black male associates. The ebony- skinned court clerk was born in Britain to African parents. The usher hails from the Indian sub- continent. Among those before them are a fair-skinned English teenager accused of drawing a knife on a policeman; a female migrant from Crotia facing shoplifting charges and three brothers from West Africa, accused of making false claims in applying for British passports.

But, in a nation of 57 million where only 4 million are members of racial minorities, does such a scene give a misleading impression of ethnic diversity?

The issue behind such questions is being furiously debated in the wake of a government- sponsored report that urges Prime Minister Tony Blair to declare Britain a multicultural society. More controversial is its suggestion that the word 'British' should be scrapped.

'Britishness,' the report concludes, 'has largely unspoken racial connotations. Whiteness nowhere features as an explicit condition of being British, but it is widely understood that ... Britishness is racially coded.'

A white complexion and Britishness, the report asserts, 'go together like roast beef and Yorkshire pudding,' and the time has come to accept the 'growing ethnic diversity of [United Kingdom] society.'

It's not clear what term would be used instead, but the Commission into the Future of Multiethnic Britain, which published its report October 11, apparently didn't anticipate the sharp reaction to such ideas. Gerald Howarth, a senior opposition Conservative member of the House of Commons home affairs committee, said the report was 'an extraordinary affront' to the '94 percent of our population which is not from ethnic minorities,' adding, 'The native British must stand up for themselves.' Philip Johnston, political editor of London's right-wing Daily Telegraph newspaper, calls the report 'a cauldron of political correctness.'

Lord Parekh, the Indian-born chairman of the commission, insists that his panel is merely asking the nation to face ethnic realities and rethink its imperial past. The decision to mount a detailed study of race relations was taken in 1998. At the time, the police, civil service, and judiciary were under fire for institutional racism. Unemployment and crime levels were rising among minority groups from Africa and the Caribbean.

A member of the commission, who did not wish to be identified, explains, "We see the concept of Britishness as racist because it is used by many whites in a way suggesting that nonwhites do not really 'belong.'"

The inquiry was organized by the Runnymede Trust, a charity long involved in racial issues. It is named for the spot near London where King John signed the Magna Carta, a guarantee of rights and rule of law, in 1215.

The 400-page report makes 138 recommendations intended to improve ethnic 'inclusivity.' Among them an equality commission, backed by a single equality law, to cover all unlawful discrimination; an independent police complaints body; and a requirement that television franchise holders appoint a specified number of black and Asian staff.

Mr. Blair's aides said he greeted the 'main body' of the Runnymede report with enthusiasm, but thought its conclusions on Britishness were 'a diversion from the main issues' facing the nation. Later, Home Secretary Jack Straw hardened the official response, saying, 'I am proud of what I believe to be the best of British values.' Downing Street sources say the prime minister is on the side of those who want to redefine what being British means (after all, it was he who coined the catchphrase 'Cool Britannia'). But with a general election expected next year, he is leery of ditching the roast beef and Yorkshire pudding approach to Britishness.